The demand for residential electricity in South Africa

This paper examines the residential demand for electricity in South Africa as a function of real gross domestic product per capita, and the price of electricity during the period 1978–2005. We make use of the bounds testing approach to cointegration within an autoregressive distributed framework, suggested by Pesaran et al. [2001. Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics 16(3) 289–326]. Following the literature, we use a linear double-logarithmic form using income and price as independent variables in the empirical analysis. In the long run, we find that income is the main determinant of electricity demand, while electricity price is insignificant.